Short-Run Bargaining, Factors Shares and Growth
AbstractIn this paper we assume that firms and unions bargain efficiently on wages and employment, whereas work effort is optimally chosen by workers. In the short run, the bargaining process leads to the contract curve. Instead of solving the model and leaving the equilibrium dependent on an exogenous social partners bargaining power, we prefer to leave the wage rate undetermined. Using an endogenous growth model based on human capital, and on the hypothesis that firms invest profits in physical capital while workers optimally allocate their earnings between consumption and investment in human capital, we determine the wage rate that maximizes individual expected utility. Finally, we investigate the relationship between short run behaviour and long run optimality.
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Bibliographic InfoPaper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 188.
Date of creation: Jul 2003
Date of revision:
distribution; endogenous growth; labour share; unemployment;
Find related papers by JEL classification:
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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